Facebook Stock Jumps as Analysts See Crypto Potential
Facebook, Inc. (FB) shares rose nearly 3% during Monday's session after analysts expressed optimism about its new cryptocurrency offering – Libra. The company will unveil a white paper on Tuesday related to the new cryptocurrency, which has already reportedly gained widespread support from industry partners and governments, including Visa Inc. (V), Mastercard Incorporated (MA), and PayPal Holdings, Inc. (PYPL). The value of the currency will reportedly be pegged to a basket of global currencies, including the dollar and euro.
SunTrust analyst Youssef Squali believes that Facebook's new Libra cryptocurrency initiative could help expand the company's growth prospects over the coming years. With a launch for Libra anticipated in 2020, the analyst cites press reports suggesting that over a dozen large financial institutions have signed on as partners, signaling Facebook's intent to become a leading online transactional platform. SunTrust maintains its Buy rating and price target of $215 per share on the stock.
Analysts have also begun speculating about the impact on other payment firms. For instance, Craig-Hallum analyst Brad Berning noted that a Facebook cryptocurrency could be a positive for PayPal since it could drive higher adoption of Braintree merchant acceptance and the Facebook marketplace.
From a technical standpoint, the stock broke out from its 50-day moving average at $182.15 to test trendline resistance from last month. The relative strength index (RSI) moved closer to overbought levels with a reading of 59.45, but the moving average convergence divergence (MACD) experienced a bullish crossover. These indicators suggest that the stock could have more room to run over the coming sessions.
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